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Payment Bonds/ Bonding Off

I've read your article "Primer on Mechanic's Liens and Bonding a Mechanic's Lien". It describes that a property owner can contact a surety bond company to purchase a surety bond that replaces the value of the lien that was filed against the property. If I understand you correctly, then a property owner can just obtain a payment bond from an insurance company and file that bond with their county recorders office and that act removes their property from the Mechanic's Lien or any future Mechanic's Liens from any other potential contractors?

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Aug 29, 2019

In Arizona, property owners are able to bond off a mechanics lien that's been filed on their property by security a surety bond (often called a "mechanics lien bond"). While these bonds are pretty similar to payment bonds, they are a bit different - I went ahead and updated that article you're referring to above to reflect that. You can find the article here: Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien. Anyway - your assessment above is correct. An owner can secure a mechanics lien bond/surety bond from a surety company and record that bond with the county recorder. Upon doing so, the mechanics lien will be released from the property - but the lien claimant will then be entitled to file an action against that bond in order to recover payment. So, bonding off a filed lien doesn't make the mechanics lien claim disappear, it just takes the property title out of the equation. Let's look at a few Arizona specifics. Bonding off an Arizona mechanics lien Under ARS § 33-1004, a property owner may bond off a mechanics lien that's been filed on their property. The bond must be secured from a surety company that is authorized to do business in Arizona, and it must equal 150% of the amount of the lien claim. As mentioned above, this bond must be recorded with the county recorder in the county where the property is located. And, once the bond is recorded, the owner must give notice to the lien claimant that their lien has been bonded off. Finally, if the lien claimant doesn't file suit against the bond within 6 months of when the lien was originally filed, or if the claimant's suit to enforce the claim against the bond is unsuccessful, the bond will be discharged and the surety and owner will be released from obligations created by the bond. Note, though, that bonding off one lien claim in Arizona will not prevent another lien claimant from pursuing a mechanics lien claim against the project property. And, if that lien claim is to be bonded off, an owner would likely need to secure another mechanics lien bond. I hope this information has been helpful! Here are some other resources I think you might find valuable: (1) Arizona Mechanics Lien Guide and FAQs (2) A Mechanics Lien Was Filed on My Property – What Do I Do Now?

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